Agreement, Consideration, Capacity & Intention Flashcards
Offer
Expression of willingness to negotiate a contract on certain terms, made with the intention, that it shall become binding as soon as it is accepted.
What form can offer take?
Different forms
e.g. letter, newspaper advertisement, email, text message, conduct.
What is the objective approach of the court to an agreement?
What a reasonable person would say was the intent of the parties having regard to all the circumstances.
With contracts, do you look into actual intent of a man’s mind? Will saying “I did not intend to contract” negate the contract?
No - you look at what he said and did
No - will merely be first step in negotiations - “will sell” would be intention to be bound
This is certainty of offer
Gibson - City wrote to tenant saying council ‘may be prepared to sell house at purchase price of £x’ - was not a binding conttact once the tenant completed the form
What is the difference between unilateral and bilateral contracts?
Bilateral: Each party assumes obligation to other party by making a promise to do something
‘Unilateral’ (see note): One party makes an offer calling for an act to be performed by one or more parties. Actual performance will constitute acceptance e.g. “if you deliver a watch to me in the next ten days I will immediately pay you £100”
NB unilateral contracts don’t actually exist - is just a contract formed
What is the difference between an offer and an invitation to treat?
Offer: An undertaking to be contractually bound by terms in the event of unconditional acceptance.
Invitation to treat: A first step in negotiations which may or may not lead to an offer. Does NOT use committed language.
Types: advertisements, display of goods (in shop window), invitations to
What is the general rule regarding what advertisements are?
They are statements inviting further negotiations/invitations to treat
When is an advertisement is not an invitation to treat?
What is the exception for advertisements?
Where an advertisement amounts to a unilateral offer
Advert for a reward (definite promise to pay if a specified condition)
Carbolic Smoke Ball - issued advertisement offering to pay £100 to any person who used a smoke ball for a specified period but still contracted influenza; they deposited £1000 in bank account to show sincerity - Ds bound to pay money to someone who contracted influenza as this was a unilateral offer: clear prescribed act, performance of which constituted acceptance + deposit of £1,000 + certainty of language.
What are the 2 requirements of a unilateral offer as per Carbolic?
- Prescribed act; and
- Clear intention to be bound
When are unilateral contracts formed?
“If you do X, I promise to do Y.”
Only one party making a promise, no one is bound to do a specified act.
Usually advertismenets are invitations of treat, but if there are special circumstances that show intention of be bound
Eg in Carill money dposited with a bank in case anyone met conditions
Then advertismeent may amount to a unilateral offer
Are price-marked goods displayed in a shop window an offer? Is this different when there is a ‘special offer’ or in a self-service store?
No - will always be an invitation to treat
Would be problematic re minors + alcohol if it was an offer
What is the general rule on invitations to tender? Must the requestor accept the most competitive?
Where a party wishes to purchase major item/service - requestor invites
Will be invitations to treat - requestor can accept or reject any tender even if most competitive
What is the general rule on auction sales?
Will be an invitation to treat - acceptance of bidder’s offer is indicated by fall of auctioneer’s hammer
What are the exceptions for an invitation to tender and auctions?
Where the invitation to tender expressly undertakes to accept the highest/lowest bid (is a unilateral contract)
In an auction without reserve where seller promises to sell to the highest bidder (cf auctions with reserve; if no bid made above price seller keeps goods)
Where there is an auction without reserve, how can the auctioneer be sued for breach of contract if they refuse to sell to the highest bona fide bidder? Is the bidder entitled to the goods?
Because there are two contracts…
1. Bilateral contract where bidder makes offer
2. Unilateral contract based on promise that auction will be without reserve
The highest bidder is not entitled to the goods as this is dictated by bilateral contract, but entitled to compensation by damages
What are the 4 rules in relation to acceptance?
Can anyone accept? What is the rule? How does one accept?
Must be in response to an offer (i.e. only person to whom offer is made can accept, no eavesdroppers)
Must be unqualified (mirror-image rule; correspond exactly with offer terms)
May be necessary to follow (clearly) prescribed mode of acceptance
Acceptance must be communicated
Acceptance must be communicated
How?
Can be accepted by
* words; or
* conduct (if there’s a unilateral contract)
Will the prescribed mode of acceptance always be mandatory? If it is not mandatory, what other form of acceptance will bind offeror?
Only mandatory if particularly clear words
If not mandatory: another mode of acceptance no less advantageous to offeror will bind them
Can silence amout to acceptance?
If there is intention to accept but no communication what happens?
Silence CANNOT amoount to accpetance!
Intention but no communication = no contract (i.e. mental assent not acceptance)
Can authorised agent inform of acceptance?
Yes, authorised agent can inform of acceptance under authority of offeree
How do the rules of revocation change for a unilateral offer?
Re partial performance
Possible to revoke any time prior to completion, but will be under **implied promise **not to revoke if specified act is started within a reasonable time
Partial performance - sufficient to prevent revokation
Errington - father agreed to give house to son and daughter-in-law if they paid off mortgage on house - couple made several payments when dad sought to revoke offer - court held promise could not be revoked after instalments began and continued to be paid
How is revocation possible where an offer is made to the whole world?
Almost impossible and only effective if offeror takes reasonable steps to bring revocation to attention of those who saw offer
What is the postal rule?
Re acceptance
Acceptance takes effect from moment letter of acceptance is properly posted not when received by offeror
Properly posted = letter box, hands of authorised postal operative
Offer accepted when posted
Binding contract at the time of posting letter
What is the effect on a letter being delayed/lost in the post on the postal rule?
Nothing - rule will still apply
Accepted as soon as posted, regardless of whether its read!
Postal rule is exception to the principle that acceptance must be communicated to make a binding contract.
For poastal rule to apply, following conditions must be met:
- it was reasonable to use post
- letter was properly addressed
- postal rule was not been excluded by offeror
(Rule excluded if offer said it requires “notice” in writting to D, acceptance actually had to arrive with D to be effective).
When does the postal rule not apply?
3 situations
- If not contemplated post would be used (e.g. prompt acceptance required)
- If incorrectly addressed
- If disapplied by offeror (ousts postal rule e.g. requires receipt of acceptance)
Implied condition of prompt acceptance means post would be unreasonable
Does the postal rule apply to revocation the same way?
No - revocation of an offer must be received to be effective
What are the rules with instantaneous communication?
Acceptance takes place where it is received by the offeror
Where acceptance is communicated by instantaneous means, what happens where the acceptance is not fully communicated due to the fault of the offeror?
E.g. poor mobile reception and do not ask acceptance to be repeated
Offeror may be prevented from saying they did not receive acceptance
Cf not received without fault of offeror = no contract
When email is by acceptance and is sent in ordinary office hours on a Friday, but is not seen until Monday, when will it be received (and thus acceptance effective)?
Would have been received on the Friday
Offeree reasonably assumed there was effective communication
What about outside of ordinary office hours and emails re acceptance?
I.e. If aen email is sent in the late hours of Friday?
A message sent in late hours of Friday would be received at start of business on Monday
Especially important in international communications
How do you communicate acceptance of a unilateral contract?
No need for communication; performance is sufficient!
Summary on when:
1. Rejection
2. Revocation
3. Acceptance
happens
- Communicated to offeror
- Effective upon notice reaching offeror
- Postal rule = when posted, instantaneous communication = when received by offeror
How can an offer be terminated?
3 ways
- Counter offer
- Lapse of time (passage of time or death)
- Express rejection
- Revocation i.e. withdrawal of offer by offeror (before acceptance)
If oferee paid £1 to keep an option to buy house open for six months, cannot revoke offer.
Once an offer has been rejected, can it be accepted?
Not unless offeror makes same offer again
When will rejection take effect?
Not until it is actually communicated to the offeror - only then do they know they are free from offer
What happens when a counter-offer is accepted?
In terms of the original offer
The original offer is deemed to have been rejected and the counter-offers terms become those of the contract
Last person to assert their own terms and conditions likely to prevail